Beth Israel Deaconess Urged to Investigate Member of Board of Overseers Who Raised Millions for Madoff

Dozens of Massachusetts charities have been hurt by scandal, including major BIDMC donors

BOSTON, Feb. 18 /PRNewswire-USNewswire/ -- Beth Israel Deaconess Medical Center has been urged to investigate a member of its Board of Overseers who raised millions of dollars for Bernard Madoff in what is alleged to be the biggest Ponzi scheme in history, which may have a devastating impact on dozens of charities and non-profit organizations throughout the Commonwealth. BIDMC Board of Overseers member Robert Jaffe was a broker and vice president of Cohmad Securities Corp., which was based out of the same Manhattan office building as Bernard Madoff's firm.

Jaffe twice failed to appear after being subpoenaed by Secretary of State William F. Galvin, who has moved to shut down Cohmad Securities because of its connection to the Madoff scandal. On February 4, Jaffe finally testified before the Massachusetts Securities Division, though he refused to answer questions.

However, it is not clear if Beth Israel Deaconess has conducted its own investigation into Jaffe or requested his resignation from the Board of Overseers. Yesterday, 1199SEIU United Healthcare Workers East sent a letter (attached) to the BIDMC Board of Directors, urging them to investigate Jaffe's conduct and remove him from the Board of Overseers if appropriate.

"It's a sad irony that someone who raised millions for the what may be the biggest Ponzi scheme in history is on the BIDMC Board of Overseers," said 1199SEIU Executive Vice President Mike Fadel. "In the interest of patients and the hospital's charitable mission, we hope this BIDMC Overseer's conduct is fully investigated."

The Board of Overseers of BIDMC is charged with supporting the charitable endeavors of the organization and acting as goodwill ambassadors to the community. Given the high profile nature of the scandal, and its effect on several of BIDMC's largest donors, the primary duties assigned to the Board of Overseers may be hindered by the presence of Mr. Jaffe. 1199SEIU sent the letter as part of an overall commitment to holding health care providers accountable to their patients, communities and caregivers, as well as to their charitable and fiduciary duties.

As an indication of the far-reaching impact the Madoff scandal has had on local charities, one Massachusetts philanthropic organization recently sent a letter to 80 nonprofits stating that it will make no new grants this year.

Representing more than 340,000 healthcare workers throughout Massachusetts, New York, New Jersey, Maryland, and the District of Columbia, 1199SEIU United Healthcare Workers East is the largest and fastest growing healthcare union in America. Our mission is to achieve affordable, high quality healthcare for all.

February 17, 2009

To BIDMC Board of Directors:

1199 SEIU is committed to holding health care providers accountable to the communities they serve and to their charitable missions. We write to raise a concern about Robert Jaffe, a member of the Beth Israel Deaconess Medical Center (BIDMC) Board of Overseers. The Board may wish to determine whether these concerns potentially interfere with his ability to perform his duties as an overseer of BIDMC.

Overseers are charged with acting as goodwill ambassadors on behalf of BIDMC and are supposed to "demonstrate significant interest in and support for [BIDMC] and its charitable mission."(1) If an individual is unable to fulfill such a role, it raises questions about whether he or she should continue to serve on the board.

Hundreds of Massachusetts investors, including several major donors to BIDMC and members of the BIDMC Board of Overseers,(2) may have been victims of Bernard Madoff's alleged Ponzi scheme.(3) According to the Boston Globe, Jaffe raised millions of dollars for Madoff.(4) Jaffe worked for Cohmad Securities, a firm that Massachusetts Secretary of State William Galvin has moved to shut down because of its ties to Madoff.(5) Moreover when Jaffe was called to testify before the Secretary of State, the Boston Globe reported that he twice failed to appear to testify and that when he appeared to testify, he invoked his Fifth Amendment right.(6)

While Jaffe's role in the alleged scheme is yet to be determined, you may wish to conduct your own investigation to determine whether the allegations are true and, whether, regardless, they adversely impact his ability to effectively serve as an Overseer of BIDMC.

Given current scrutiny of nonprofit hospitals, as fiduciaries of BIDMC entrusted with overseeing the charitable mission of the institution, if you determine that these allegations adversely affect Jaffe's service, you may wish to remove him from the Board of Overseers if he has not already resigned.

Please feel free to contact me at (617) 284 -1199 to further discuss this matter.

(5) "In The Matter of Cohmad Securities Corporation: Administrative Complaint and Ex Parte Motion for an Order Summarily Suspending Registration as a Broker-Dealer," Docket No. 2009-0015, Commonwealth of Massachusetts Office Of The Secretary Of The Commonwealth, Securities Division, February 11, 2009.